The WCI Family Budget Meeting

I am convinced that one key to the financial success we have had is what we call our monthly budget meeting. It isn’t REALLY about a budget, since Budgets Are For Rookies, and we don’t really budget. Budgeting requires you to actually set up categories for spending and to stop spending when you hit the limit for that category. We don’t do that, so we don’t technically budget. So what is the purpose of this meeting? There are several, which I’ll list in order of importance:

Ensure we talk at least once a month about our financial priorities and make sure we’re on the same page

Ensure we have money set aside for taxes and charity

Allocate our savings account toward our financial goals

Calculate our allowances

Catch fraudulent transactions

Notice that those goals are not “to make sure we’re not spending too much” nor “to project our spending for the next month.” In fact, we typically do our “budget” meeting long after the month has ended. The main reason we are able to live without a real budget is that we set up our lifestyle so that we could live and save adequately on what I was paid as a pre-partner. We really haven’t had a huge increase in lifestyle since making partner (50%+ raise in my group) nor since WCI started making money. All that extra money mostly just accelerates our financial goals, although we pay more in taxes, give more away, and do spend a little more. So in any given month, the only question is the rate at which our financial goals will be accelerated. We’ve been married for 17 1/2 years now, so we have done this drill 17*12+6 = 222 times. We’re pretty good at it by now. Here’s how it happens. We’ll use our actual May 2016 spending plan to make things more real.

Income

By necessity, one person has to do a bit more of the work than the other person. My wife did that extra work back in residency, but I’ve pretty much done it since. This involves inputting the information on to our spread sheet. The first section is income. So I take my total clinical pay from the spreadsheet our managing partner puts together, and the total WCI pay from the spreadsheet that Cindy, my business manager, puts together, then I hunt up any investment income from taxable accounts that we may have had. For May, the income section looks like this:

[Update 12/13/16: Specific income figures removed at the request of a partner. Average emergency physician partner incomes are easily found with a Google search and WCI income reports are published each January.]

Total: $85,181.91

Those numbers change dramatically month to month, as does the total. Seems like a lot of money, right? It sure does to us. We’re amazed every month when we look at it. But to be honest, we’ve been amazed every month we looked at that number since late 2003, when we were getting her teacher pay AND my resident pay. It was like money coming out of our ears! We were paying off debt and making investments left and right. Same game, different number of zeros..

Why spend more than 10 minutes budgeting when there are so many more important things to do?

Expenses

Okay, let’s move on to the expense side of the equation.

Taxes: $22.999.12

Where does that number come from? It comes from our annual tax planning. As regular readers will recall, we paid about 25% of our income last year in federal, state, and payroll taxes. I think that percentage will be a little higher this year, as we will probably make a little more money and we don’t have that huge loss from our accidental rental property that we wrote off last year. So I’m using 27%. So I multiply the income each month by 27%, and that’s the amount I set aside for taxes. Remember that figure has very little to do with how much I actually send Uncle Sam each quarter. Our quarterly estimated tax amount comes from last year’s total federal tax bill multiplied by 110%, and divided by four. That will keep us in the safe harbor. The 27% is the amount I actually think we’ll end up paying in federal and state taxes. That amount goes into the savings account each month, and once a quarter a big fat check comes out of it. Another big fat check for state taxes will come out of it next April.

401(k) Contributions: $6104.08

One of the few things pulled out of my partnership distributions before I get it is a contribution to the 401(k)/Profit-sharing plan. Obviously we hit the maximum before December, at which point those contributions are used elsewhere.

Charity: $7,907.78

We allocate 10% of our gross minus retirement contributions to charity each year. Actually, we give quite a bit more, but that’s what we allocate as we go along. It goes into the savings account like the taxes do and is tracked on a separate spreadsheet. Why do we exclude retirement contributions? Because we plan to pay 10% on that when we pull it out instead of when it goes in. Seems a lot easier to keep track of that way to us.

Those are our big expenses. Now we’ll get to the smaller ones.

Mortgage (PITI): $2,848.64

Utilities: $372.48 (May is a great utilities month, the furnace isn’t run, nor is the A/C, and the lawn doesn’t need much water.)

Insurance: $1,490.52

Those are all pretty self-explanatory. Our last “budget” category is what we call our variable expenses. We currently allocate $5,000 a month to that. It covers everything else, including our allowances. In fact, the size of our allowance is determined by how good we do keeping the variable expenses in check. Whatever is left of that $5K at the end of the month, we split in half and add to our individual allowance categories in the savings account. What do we have to pay for out of our allowances? Things like skis, bicycles, sports leagues, and anything else that we don’t want to have to be accountable to our spouse for. Sometimes, we over spend that $5K. That sucks, because it means we get a negative allowance that month and have to pay money out of our allowances into the family account to cover the difference. If that seems to be happening too often, (and we can afford to do so) we increase the allocation to variable expenses.

So at this point, I go through all the expenses we had during the month by looking at the bank account and the credit card statements since we basically don’t use cash at all. In May, there were 87 transactions. Some were positive (reimbursements and credits) but most are negative. Some of the big ones in May were $435 for piano lessons, $460 for soccer leagues, a $400 charitable donation, $446 we spent on cycling clothing, and a new bicycle for one of the kids for $673. We had 15 transactions for gas, for a total of $565, 17 transactions at restaurants for $369.80, and 9 transactions for groceries for $945.78. All together, we busted the budget by spending $5,468, so we had negative allowances in May.

So our total income for May was $85,181.91 and our total expenses were $46,722.82 leaving us $38,459.29 to put into our savings account.

But what are we actually spending in any given month? You know, the income that would need to be replaced in retirement? $1500 in insurance (subtract out about $400 for life and disability insurance), $500 for utilities, $2900 for the mortgage (hopefully that would turn into just $500 for property taxes and insurance), and $5000 in variable expenses. So about $7,000 a month. Add in a little slush for taxes, charity, and large expenses we can’t cover from the variable expense account, and we’re up to maybe $10,000 a month, or $120,000 a year. Assuming $30K from Social Security and a 4% withdrawal rate, that means we can retire when our retirement savings is $2-3M. Very doable.

[Update prior to publication: This post was written last summer, but the serious cash flow issue discussed in this next section actually caused us to change our process a little this last month. In our most recent budget meeting we faced reality and the truth is that our “number,” at least if I quit working before 70, is probably in the $4-5M range in today’s dollars. Maybe knock a million off for Social Security. Darn that hedonic treadmill. It’s not that we can’t live on less, it’s that we don’t really want to and probably don’t have to. More details in an upcoming post, but we think the new process will work a lot better and it certainly gives us a better idea what we’re actually spending so we can forecast our “number” better.]

Adjusting the Savings Account

We also spent a bunch of money from savings. For instance, our allowances. My wife finally got around to buying a nice fancy $6000 mountain bike she’s been eyeing for a couple of years, which pretty much cleaned out her allowance, and I spent $500 on a mother’s day present (Broadway season tickets.)

We also spent $1,700 from our home improvement allocation on cleaning up some mold and replacing a leaky door.

Oh, and we bought a $60,000 car. Where did that money come from? Well, we had a few thousand put away for a new car purchase. We had $38,000 left over in our monthly budget, and then we pulled the rest from savings that was allocated to go into an investment.

So, if you count up what we really spent in May, we spent every dime of our huge income plus another ~ $30K. If you’re ever wondering how people go broke on huge incomes, you can now see how. They just make every month look like May did for us.

In fact, the main reason behind this monthly meeting is adjusting the savings account spreadsheet, not the budget spreadsheet. The money swinging in and out of the savings account going toward investments, taxes, charity, and large purchases dwarfs the actual budget amounts.

Calling in the Partner

At this point, I call my wife into the room for about a 10 minute conversation.

First, I grill her (not really, but she always feels that way) about the four or five credit card transactions I don’t recognize from the month.

Second, we fight over some silly $18 expense and the fight ends up with “I’ll just pay for it out of my allowance.” We’ve actually gotten much better about these over the years.

Third, I let her know how we did for the month (income, allowances, how much we have left to allocate to our goals etc.)

Fourth, we talk about our progress toward our financial goals and decide how to reallocate the money in savings. When I’m talking about financial goals, I’m not talking about retirement and college and paying off the mortgage, although we talk about all that stuff about once a year. I’m talking about what we want to do with money in the next few months. For example, we’re saving up to make a huge investment in a business right now (don’t ask, you’ll hear about it eventually.) So I had $95,000 of our savings account allocated to that investment. However, she said she wanted to spend $6,000 on some home improvement projects in the next couple of months. So that $95,000 turned into $89,000.

[Update prior to publication: The investment fell through, so we put the money toward the mortgage, more details in an upcoming post.]

Other short term goals we have are to max out the individual 401(k)s for the year by the end of the calendar year (we still had $76,000 to go as of that budget meeting) and we’ll need $30,000 for my cash balance plan next March. In other months we might talk about an expensive upcoming vacation, or saving up to buy a car, or some money we want to give to some charities. But after 10 minutes or so, we’re pretty much done. There just isn’t that much left to discuss after 222 previous discussions.

Putting it All Together

Well, we didn’t have any fraudulent transactions, again. We made good progress toward our goals, again. We made sure we’re still on the same page with our finances. One reader wisely commented recently that you don’t have to be on the exact same page, but you at least need to be reading the same book. I’m sure your “budget meeting” is different from ours, and that’s perfectly fine. The point is that you come together periodically, make sure you’re saving enough, and align your financial priorities.

What do you think? Do you have a monthly financial meeting with a partner? Why or why not? If single, do you go over your finances periodically? How often? Why do you think it is useful? What does your budget look like? How strict are you with it? How often do you have a month like this where you spend more than you make? Comment below!

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56 comments

We definitely take a more casual approach, but my wife and I did start tracking spending last year after about ten years of combined finances. One of us will look over the transactions — geez, there’s a lot of them — and ask what category some eBay purchases belong to. No major squabbles. As you have pointed out, our spending totals end up looking pretty similar if you leave out the new Sequoia.

The last time we spent more than we made in a month? When we bought our house. We actually spent more in one day than we made after-tax in a year. If funding a donor advised fund counts, we spent way more than we made last month, too. Most of the time, there’s a hefty surplus, which allows us to build up our taxable account after all the tax-deferred buckets are filled.

We meet once a month to “run the numbers” as we like to call it. During that meeting, I’ve already taken care of all the accounting work, so we sit on the couch while I project the iPad onto the TV for us to discuss. T

he first part of the meeting involves looking at our net worth and savings goals, where we focus on whether we’re meeting our targets and talk about what to do with surplus money after targets are reached.

The second part of the meeting is where we go over our expenses. I use YNAB to track everything. It’s not because I have to, but because I realized that using YNAB gives us an edge that pushes the envelope on our savings. When you have a large income, you don’t worry about blowing past the budget for a particular category, you just adjust and move on. The second part of the meeting is more so we’re just conscious of our spending and we know where the dollars are going. I’ve found that raising your level of consciousness is its own form of a spending check.

We do the same. We look at the spending and since its always below what we could spend you’re never too concerned about it, but you just look to ask yourself if you really care or want to continue spending in that category as you just did. Then we look at goals and say, nah, this is more important, we’ll be more mindful ongoing. Like a slow check on behavior and goal reinforcement.

When we first got married four years ago we would have monthly cash conferences. We also have been using YNAB since then as well. I had never been accountable to anyone else with my money up to that point. Meeting once a month really helped with that.

Now that we are a few years in, we meet a few times a year to make sure we are on track for our goals. Looking at our student loans, our retirement savings and other fun goals (like the boat trip to St Vincent!).

Thankfully, we don’t have to budget anymore, but we still use YNAB. I think it helps us be accountable to each other with our spending, but we also spot fraudulent transactions immediately.

We use a similar approach with a monthly allowance type model but much lower. We have been remiss in not doing monthly meetings but are about to start them back up as cash is about to get tighter with the move to single family income. Before in the status quo we were consistently within allowance. With things changing on both the cost and revenue side I expect it will take a bit to get back into the groove. Then we likely will return to our normal quarterly discussions.

wow. Can’t wait to start having a significant surplus. I just started moonlighting as a senior EM resident and that first check was amazing. We also use YNAB to help us know when a certain spending category gets excessive and meet on a Sunday about once per month. We have a separate spreadsheet with our loans and all of their different interest rates (didn’t consolidate the subsidized loans into the refi). Watching those numbers drop is our current financial priority. Can’t wait to diversify the surplus categories into investments (other than our ROTH) rather than just debt management.

quick question, does your current poll: “At what age do you plan to retire?” mean stop working (main physician/white coat job) or reach financial independence? My 2 ages are quite a bit different I hope

I am flattered at the transparency you have with your income numbers. Everyone where I work is paranoid to discuss income numbers for fear of Corporate Medicine taking an interest. That could be a good blog/forum discussion.

# 1 They’re highly variable.
# 2 Nobody that might care knows how many hours I’m working. My average monthly clinical income is now less of course since I’m working 3/4 time now.
# 3 I already tell everyone what I make on the blog, which is now larger than my physician income.
# 4 It’s just money. Some people make and have more than me and some make and have less. I’m okay with that. If I really wanted to brag I’d talk about my kids. If people, especially doctors, would get over talking about money they’d probably be a lot more financially successful.

I like your approach and transparency. Physicans typically hide their salary and other sources of income which ultmately hurts them in longterm as they loose their negotiatiating power when they dont know how much their colleagues are getting paid for the same amount of work.

exactly. Im sure the corporate types think our little “honor” type of taboo is hilarious and have a giggle about it when they meet up. Information is power. The corporations are already signing your checks, they know, dont get the concern.

CounterPoint: Until year 32 of our marriage, we never looked at our $ numbers, spent what we had time for, sent 3 kids to BigBucks universities, paid a financial advisor, splurged on conveniences, and still we ended up with $7 mil. to retire at ages 59. Wouda, coulda, shoulda, ………but it turns out OK.

So by your age and time frame you went to school in the cheapest era and likely graduated with minimal debt, excellent reimbursements and were privy to the best bull market in history? I for one find it shocking you did so well!

Seriously though, each time frame is a completely different set of circumstances and its simply not comparable.

We just do once per year when we make various contributions, look at our net worth in comparison to previous years – all in an Excel spreadsheet so I usually just have to update balances.

It’s been hard to give up the budget process since I’ve got so many years in Quicken (since 1992), even though its become a pain because:
a) I get behind by months, then its a fair amount of time to download and tweak the categorizations (i.e. a self-perpetuating vicious cycle of avoidance), and
b) it doesn’t result in any actionable plans because we spend so much less then we make

Regardless, it was nice to have 3 years worth of data when we met with a (fee-based) advisor last year to get a professional opinion on the state of our finances, overview to make sure we’re not missing anything important etc. That was useful in prodding us to get the wills and trust stuff set up.

Yes…after my presentation to the senior residents at our specialties meeting this year a insurance/wealth management person went up to speak. She was very slick, and after my talk they asked some good questions, one was about how she got paid. She responded that she is fee-based in such a smooth manner they all conflated it with fee only, to which you could hear, “great!”.

I have never heard of YNAB before now. I have used Mint.com which is free, but I use it much less since my income has gone up so much (adding lots of moonlighting work) while my fixed expenses have stayed the same as when I budgeted for my W2 income only. Now I just keep an eye on transactions through my bank to watch for fraud and occasionally check my high spending categories on Mint to make sure that spending my extra money is aligned with what makes me happy (i.e. a trip to NYC instead of Lululemon). Is YNAB really worthwhile? It looks like it’s for pay, and sheer laziness would keep me with mint unless there’s a good reason to switch that I don’t know about.

I use the previous version of YNAB before they switched to a monthly fee, so I only had to pay for the software once. You can use it as a budgeting tool for hardcore budgeting if you want, but I think of it like the Quicken of old days. I enter each transaction manually into the register (I think the new version does it automatically, but I really don’t have that many transactions and so it takes only a few minutes a week).

After entering the transactions, it’s a lot like balancing your checkbook and reconciling the transactions with your online accounts. I can see why people wouldn’t want to do this, but presumably you’re going to look through your credit card statement at some point to make sure the charges are correct, so it’s no big deal for me to do it in real time.

Anyway, all of this was just to say that I use it for keeping track of my accounts, and then the budgeting stuff is layered on top of it automatically. The big shift is switching over to the YNAB theories on money management which is that you can’t really spend money until you receive it (crazy, I know!). In YNAB, you receive income which then lets you allocate it according to how you want to spend it. The only “income” I let into the system is the amount I intend to spend on expenses (investments don’t count – that money never makes it into YNAB – so we’re just talking about bills here).

I probably haven’t done a great job of explaining it. There are some explainer videos on the website which might help. I dove into about 15 months ago and never looked back. Now it feels as natural as just reconciling a checkbook. The “budget” aspect of it is really flexible, so it’s not like you’re beating your head against the wall. If you spend more in a category, you either have to adjust some other spending or bring some money in from savings to cover the expense (just like in real life).

Good article. When I left residency and we finally got real about money (especially our debt) we started doing Monthly Money Meeting, and even though our situation has improved greatly we still do it and I consider it a big key to keeping our financial and marital lives happy and healthy. Unlike you we do keep a meticulous budget. We each keep track of monthly spending, broken into several categories, in separate spreadsheets that we review – I just wouldn’t trust ourselves not to. I then review the status of our debt, retirement accounts, savings accounts, and overall net worth. We then look at the 1-2 months ahead and talk about any money concerns or anything that might need special accounting from next month’s paycheck. It used to take longer, but since times are better the whole meeting takes 5 min or less. Also, I took a small bonus early on and used it to pay a month’s expenses so my income and budgeting is a month ahead of expenditures, so I always have money in the bank.

Yes. If you can talk and agree about money, you can talk and agree about just about anything. Very helpful for marital harmony. You already have a built in meeting to discuss issues. No reason you can’t throw in a discussion on chores, in-laws, sex, religion etc as well.

My wife and I meet once a month at least to see if we are on track with our budget and to adjust spending accordingly if not. Sadly I feel that many of my classmates or med students in general look the other way and don’t hold themselves accountable to taking out the least amount of money possible. The attitude of I will address it later seems pretty prevalent.

I would love to see WCI do a post addressing what medical students should be doing and thinking about before taking out loans. I think this could really resonate with a lot of people who just need a little push to get started.

I think I need to entice some students to guest post on the subject. I’m not sure how many more ways I can say spend as little as possible and take out your loans as late as possible and remember that everything you buy will cost 3 times as much by the time you pay it off.

I’ve thought about writing you a guest post, having a wife and 3 kids while living on the cheap in med school. The problem is, every time I think about it, I realize I’d literally just say what you just said. We know exactly how much money we have for the next 6 months. We pull aside any big expected expenses (like boards money) then divide the remainder by 6, and pay ourselves that fixed amount each month. We rarely spend all of our month’s allotted funds and end the 6 month period with money leftover. Don’t spend more than what you know you have. Like some sort of revolutionary idea!

Except in your case it’s not spending less than you have. It’s spending as little as possible. There is no “left over.” That’s all borrowed money (unless you’re borrowing nothing for med school.) “Left over” means you took out too much and paid too much interest on it. Sure, better to have left over so you can take out less next semester, but that’s like “level 1 budgeting” whereas “level 2 budgeting” is realizing you’re already way past your income on day 1 of the semester.

Actually we did take out “too much” intentionally simply because we didn’t want to take out residency and relocation loans. My school doesn’t include any of the residency application process in the COA calculation. So we had “saved” about $5000 for residency applications. Burned through most of that pretty quick, but because of it we won’t have to take out any private loans. I did end up getting 2 southwest credit cards this year, giving me over 100,000 air miles, and making almost all my airfare free. So where you see Level 1 budget, I see planning ahead.
I realize I COULD have them give me little bits at a time to decrease interest accumulation, but really I don’t want to be bothered with emailing my financial aid office every couple months.

I think this is a great habit that you guys established. I’m sure it is helpful for communication, planning, and goal setting. Apparently it isn’t mandatory though because my wife and I have never done it. Based on our interests and abilities we divided things up. She does the short term cash management and bill paying. I do the long term investing and long term financial planning. I hate writing checks for bills and she hates asset allocation so that all works well for us. We don’t budget. We are doing great financially due to our income, frugality, investing, and luck.

We do this but somewhat modified. I crunch the numbers ~monthly and the “What was this check??” grilling happens then. The more in depth “here’s where the money’s going, how are we doing, what are we planning for…” comes quarterly. We’re a multigenerational household (my mom lives with us to help with the kids) and we include all 3 adults in the conversation, but none of the kids (oldest is 6 yo).

Used to do the tracking via Quicken which was super easy, but then a minor catastrophe destroyed the quicken file and backups. Tried doing it via Mint for the past year or two and I haven’t found it anywhere near as functional, but it is cheaper/free so there’s that. I have found that we are trending more and more towards your large slush fund idea. For whatever reason I like tracking groceries vs dining out expenses separately, but the “household expenses” category is rapidly subsuming basically everything else.

This was a great reminder for me to schedule monthly financial meetings again starting in January. My wife and I would get together regularly a few years ago, but it’s been basically running on autopilot since then. Fortunately, we’re still on the same page with pretty much everything even with the lack of attention.

We also use the formula gross minus retirement (we treat social security the same way) when calculating 10% for our charitable donations, with the plan to donate 10% of retirement withdrawals to charity in the tax year of withdrawal. I have recently wondered if we should start a donor advised fund for that 10% that we will someday donate to charity. It would make sense to get the deduction during peak earning years (now). This may be particularly relevant now that we have a republican president, senate & house – likely we will have lower marginal rates next year, which would make the tax deduction more valuable this year. I was always turned off by DAF due to the fees, but PoF recently pointed out (somewhere) that the fee is similar to the tax drag on total stock market in a taxable account – so maybe I shouldn’t sweat the fees after all. Thoughts?

My wife and I go over things every quarter. We mainly check if we’re hitting our savings and investing goals. We don’t use a budget either but we are conscious of our spending overall. It really keeps us on the same page when it comes to our financial goals and plans. Also, since I take care of most of the finances, I feel that having regular meetings would be helpful in the event that something happens to me.

We never really had a budget. We always just paid ourselves first and then spent the rest. As my income grew we found ourselves not spending the all of the rest and investing that as well.

A few years later I found your blog followed by MMM. Since then I have looked at our spending under higher scrutiny and we try our best to only spend on things that purchase the most happiness. That process had A dramatic change in our happiness. I even work less because less money is wasted haphazardly.

Today, we still don’t budget, but track how much we spend each month so that we know what our number is and when we can retire/semi-retire. One thing I learned while calculating our spending is that if we downsized our house and had slightly less extravagent vacations, we can retire today. That was an amazing realization. It lets us know I don’t have to work unless I enjoy it, or I am trying to purchase other things that might bring us happiness. I actually like working more now.

I also realized that one day when we really do retire budgeting is going to get much more important.

I really enjoyed this post, but I am hesitant to share this information with my wife. $6000 for a mountain bike?! I get nervous when my wife spends $300 for her knitting supplies and $500 for clothes for the family. Perhaps I should let loose a little. Based on the posts so far, it seems that a good number of your readers are self-employed docs. My wife and I are both employed physicians (me at a university), similar to the Sheltered Sam model in Bernstein’s books. As employees, we set up a lot of automatic withdrawals. The pre-tax deductions and savings are taken out with each paycheck. $36k/yr for the 403(b)s, $36k/yr for the 457s, $16K/yr for my 401(a), and $16k/yr for my contribution to the state pension, and my employer puts in another 6% of my salary toward my pension as well. The mortgage payment automatically goes into a separate bank account to be paid each month. 529 withdrawals (3 kids) are automatically withdrawn (fortunately, less now that 1 is just finishing university, and the 2nd’s 529 is fully funded). $4k goes into a taxable investment fund. The rest is for monthly expenses (utility, food, clothing, knitting supplies) or extra savings. Most of the spending discussions happen when the CC statement becomes available, or when planning a trip, home repair or remodel. Thanks again.

Everyone participating in this site is using a budget whether it’s consciously or not. That definitely includes WCI and the other folks with multi-million dollars portfolios in retirement. It’s a projection of expenses AND income, not a track-every-penny-spent-on-Starbucks mandate. Expenses include “spending” into retirement accounts and “spending” into savings accounts for future big ticket items. It’s where your financial decisions and goals come into reality on paper. No different than any successful business that plans for the future.

People use different tools for managing the budget, but they’re all working on the same outcome regardless of using monthly meetings, detailed spreadsheets, quarterly account statements, YNAB, Mint, Dave Ramsey’s famed cash envelopes.

Despite the “Budgets Are For Rookies” post about training wheels, I recall a very recent WCI post about potentially losing the ability to work for awhile. It included all sorts of massive changes to both projected income and expenses – aka “budget” to the rest of us. It’s easy to forget when things are on autopilot for awhile.

I think I’d have to have the monthly budget meeting talking to myself… No way I could get my husband interested! Sounds like a good idea though. Thankfully it all seems to work out without worrying about it too much (even at the low end of physician income).

We don’t keep a budget, nor do we really track expenses (well, besides that amazon annual statement coming in the mail…) 😀 Aside from the monthly notes, we’re both thankfully pretty big cheapskates and hardly buy anything. About once a year we go on a trip, and seemingly once or twice a year we have a big or small household expense (water heater, waste line, re sod grass, build a fence) that sets us back about a month but mostly since we are fortunate to have two incomes we have the ability to take a little hit here and there without breaking a sweat, even if one income is a just resident salary.

Every month, I force myself to scan through the credit card statement and the bank account statements to check for fraud. And I update our spreadsheet which tracks our net worth just for fun. Every month it creeps up a bit mostly due to the payment of debt.

I think once we have more kids and they get older it’ll be a little bit tougher, but for now our plan works. I don’t believe creating a rookie budget spending plan would really alter our habits.

I hope you’ll still post about the potential investment, even though it didn’t work out. I was curious when you mentioned it a few months ago and would love to know more about the process and why it didn’t work out (even if you change the names to protect the innocent).

It could still happen in the future, it’s a space with a lot of competition, and I have at least an informal non-disclosure agreement regarding it. So, not going to provide much in the way of details for now. Maybe in a few years it will provide an interesting post, but it’s really not a very interesting story at this point.

My wife and I do “family business meeting” every Sunday – I am still in residency and we are trying to cut expenses/pay off loans asap. Our meetings go almost exactly as you describe above – literally the four steps you describe above in the “Calling in the Partner” paragraph are exactly how our “meetings” go. My wife thinks we are strange (compared to our colleagues who just spend), so its refreshing to see stuff like your post above to remind us how “normal” we are.

We don’t ever have much of a designated time to talk expenses or budgets. Fortunately, we’re meeting our expenses and still able to save a small chunk of income (probably should be more) and still be good shape financially.

What I envision as potentially budget and savings busting is whether kids go to private school (grade school +/- college). The expenses can really rack up if you start them in private school early, with potentially no return of investment. It’s a point of contention we have that truly has no great answer for our family. As much as I tend to ignore the in-laws and extended family, there is always some indirect pressure to help out our kids to the best of our abilities. Look at those piano lessons! Not cheap!

I do the money management in the family. Husband just now (talking money to grown daughter) made me laugh when he semiseriously claimed that he directs me in my more detailed work on the budget. I call out unclear purchases to him when I get the CC bill if he’s in earshot or if it’s very big or very dodgy but otherwise our meetings are me pushing him to pay attention annually to the spreadsheet of our overall holdings and him giving me a minute or 5 and then saying “good job carry on!”

He is pretty amenable to letting me have my stingy way but I think (and wish?) he’d pay more careful attention and push me to let him spend more where he wishes. I also worry a bit he would be in trouble if he had to suddenly take over from me. Probably not true but his knowledge is more osmosis than focused education or observation. I actually take it as proof that he doesn’t want to get a new sailboat that he doesn’t push for one, even after my brother (an official financier) told him we could afford it and we should go ahead and get it. (I argue we should wait until the last kid’s education is definitely covered, and actually hope by then he’ll go along with moving AWAY from the coast and opt for a smaller boat than the one we have now.)

Any chance you could elaborate on your edit to the post when you say you’d need $4M-$5M in today’s dollars to retire? That sort of freaked me out as it doesn’t seem like you live an extravagant lifestyle. If we use the 4% rule on $4M, that would give you ~$160k per year to spend, which seems like plenty given your spending (especially if you no longer have a house payment).

What am I missing? is it that fact that you’re assuming an early retirement, therefore requiring the pile of money to last much longer than 30 years and therefore needing to use a withdrawal rate of much lower than 4%?

The 4% rate is supposed to last until death for the vast majority of people. Given WCI’s diligence, I’m also curious what Part 2 will reveal in case we’re making a similar mistake. Best guess is what you mentioned since one of his year-end posts showed an updated analysis based on longer horizons. Instead of going out 30 years for retirement, the blogger carried it out to 60 years using similar data as the Trinity study.

Hard to imagine half a point making any real difference here though. I’m more skeptical about applying market statistics from the last 150 years ago to the next fifty years. The changes alone from the past 15 years (real-time quotes for all, AI trading, free/dirt-cheap instant trades, vastly more people in the market, huge influx of inheritance money coming shortly from the Baby Boomers, international) make the stock market of olden days seem completely unrecognizable to today’s market.

p.s. Here’s a subtle detail about the Trinity study that I never noticed before. Ouch.

“The 50-50 portfolio over 30 years with 4% withdrawals had a 96% success rate without fees, 84% success rate with 1% fees, and 65% success rate with 2% fees. This, in and of itself, is a reason to be cautious about using 4%.”

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